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The Crédit Mutuel-CM11 Group in 2016 February 23, 2017 Strong commercial activity, technological performance and financial soundness Results for the year ended December 31, 2016 change at constant scope

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The Crédit Mutuel-CM11 Group in 2016 February 23, 2017 Strong commercial activity, technological performance and financial soundness Results for the year ended December 31, 2016 change at constant scope (1) Net banking income 13,302 m Income up 3.6% 1.8% Net income 2,624 m Sound improvement in results +4.5% 2.7% of which attributable to the owners of the company 2,410 m 6.9% 4.8% CET 1 capital ratio 15.0% (2) Very good financial strength Business Customer loans 330 bn Ongoing development at the service of the economy +8.5% +4.5% Total savings bn + 4.2% + 3.2% of which, bank deposits bn Significant inflows + 8.6% + 6.4% of which, insurance products 79.5 bn + 4.7% + 4.7% of which, savings bn - 0.3% - 0.5% (1) for further details on the changes at constant scope, please seen the methodology note at the end of this press release (2) excluding transitional provisions The Crédit Mutuel-CM11 Group recorded strong results in To best serve its 23.8 million customers and members, the group successfully combined growth, efficiency and effective risk management. It strengthened its positions in banking, insurance and technological services with telephone, remote surveillance and e-wallet solutions. New home sales via the group's real estate agency were also very strong. In an environment marked by low interest rates and greater competition, the group's net income rose by 2.7% to billion, its shareholders' equity reached 39.6 billion and its Common Equity Tier 1 (CET1) ratio was 15.0%, attesting to its solid financial position. The year 2016 was also marked by a major external growth operation with the acquisition of General Electric's factoring and lease financing activities in France and Germany. The Crédit Mutuel-CM11 Group attributes this strong performance to the strength of its cooperative model and the competence and involvement of employees and directors to whom it provides regular training, and to its ability to innovate and plan ahead to ensure that its customers and members receive the best possible service. The group's results earned it recognition throughout 2016: it received top prize in the banking sector at the BearingPoint TNS Sofres 'Podium de la Relation Client' awards and was named top French bank by the US magazine Global Finance and best French banking group by the UK magazine World Finance. Crédit Mutuel-CM11 Group Results for the year ended December 31, Development of commercial activity in all the banking, insurance and services businesses In a banking landscape characterized by low interest rates and heightened competition, the Crédit Mutuel-CM11 Group continued to develop its commercial activity to better serve its 23.8 million customers. Its performance benefited once again from its decentralized cooperative structure, its network of local branches, digital tools and its high-quality sales offering. In addition to the large amounts of loans issued and the sustained high level of deposit-taking, commercial activity was intense in the areas of insurance, telephone service, remote surveillance and real estate sales. Banking For the second straight year, customer deposits grew significantly, reflecting strong marketing activity and customers' and members' trust in the group: +8.6% to billion compared with +7.9% in Customer deposits increased by 21.8 billion, driven by current accounts (+14% to 13.1 billion) and passbook accounts (+17.3% to 7.6 billion). Inflows from home savings remained high ( 2.9 billion) and the total amount of these savings increased by 10.4% to 31.1 billion. Inflows from other shortterm investment savings products improved in 2016: Livret Bleu and Livret A savings accounts rose by 3.2% (up 0.8 billion to 26.4 billion at end-2016, i.e. 9.5% of customer deposits). billion Customer deposits home savings 11% other savings accounts 19% livrets Bleu, livrets A 10% 2016 structure of bank deposits other 3% current accounts 39% term deposits 19% Outstanding customer loans ( billion) rose by 25.8 billion. This increase was linked to acquisitions (the outstanding loans of the entities acquired from GE Capital in France and Germany in July 2016 totaled 10.1 billion at end-december 2016), on the one hand, and to strong commercial development, on the other. In fact, at constant scope, outstanding loans increased by 4.5%. Activity remained high in terms of housing loans (+3.4% to billion, i.e. 49% of loans outstanding) as a result of: - the speed at which the network responded to requests from its customers and members, and - canvassing of prospects in an environment of low interest rates which supports real estate loan production. Consumer credit totaled 32.2 billion for an overall increase of 6.6% (up 2 billion). This increase was recorded at the Cofidis and Targobank Germany specialized subsidiaries (+5.4% and +8.2%, respectively) and at the branch networks of CIC (+5.9%) and Crédit Mutuel (+3.8%). Outstanding equipment loans issued to our professional and corporate customers totaled 69.1 billion at end After a very high level of loan production in 2015 ( 75.1 billion), new lending in 2016 remained significant ( 71.9 billion, down 4.3%). The funds released for housing loans totaled 31.3 billion, those for consumer loans increased by 13.9% to 16.3 billion and investment loans rose by 0.5% to Crédit Mutuel-CM11 Group Results for the year ended December 31, 16.6 billion. These figures attest to the Crédit Mutuel-CM11 Group s commitment and ability to support the projects of companies and private individuals. Net customer loans 2016 structure of net loans in billion housing loans 49% other 5% operating 12% consumer & revolving 10% investment loans and lease financing 25% The loans-to-deposits ratio was stable in 2016 at 119.5% given that deposits (+8.6%) increased at virtually the same rate as loans (+8.5%). Compared with 2012, the loans-to-deposits ratio improved by 6.6 points. Insurance The Crédit Mutuel-CM11 Group's insurance business continued to grow in Thanks to a high volume of activity in non-life insurance, revenue rose by 2.3% to 10.8 billion. In terms of the breakdown of non-life insurance, property and casualty insurance revenue ( 1.8 billion) rose by 4.6% 1, three times more than the market (+1.5%). This strong performance was linked to a very high level of auto and homeowners insurance production, with 435,000 and 351,000 policies sold, respectively. Personal protection insurance also increased significantly in 2016, with 223,800 new policies sold (+20.5%). In the area of health insurance, the networks achieved their group policy sales targets in a market that has undergone major changes since the rollout of universal supplementary health insurance (initiated by the Accord National Interprofessionnel - national multi-sector agreement). Life insurance revenue was down 1.1%. In an environment of very low interest rates, this decrease resulted from the measures taken by the group to limit inflows from funds in euros. The downturn in the market as a whole was similar (-0.6%). 1 At constant scope Crédit Mutuel-CM11 Group Results for the year ended December 31, Service activities The Crédit Mutuel-CM11 Group is developing its technological expertise in order to offer its customers and members a wide range of high-quality services such as telephone, remote surveillance and electronic wallet. EI Telecom The group's full MVNO operator sells its products under five different brands Crédit Mutuel Mobile, CIC Mobile, NRJ Mobile, Cofidis Mobile and Auchan Telecom and is the only operator that combines mobile phone services with banking products and services. For EI Telecom, the year was marked by continued development in the B2B segment along three lines: retail, focusing mainly on the branch network (products aimed at SMEs); wholesale, a new product line developed by EI Telecom to provide mobile access to large corporates or business or general public MVNOs; and the development of a white label activity with the external distribution networks (signature of an agreement with Cdiscount). EI Telecom achieved positive net customer growth by adding 50,000 customers for a total customer base of 1,566,000. In 2016, EI Telecom recorded its highest revenue ( 436 million, up 7% compared with 2015) and its highest net income ( 16 million) since its creation. At the end of 2016, EI Telecom maintained and consolidated its position as the leading French MVNO in terms of number of customers, revenue generated during the year and net income. EI Telecom is also the only full MVNO connected in 2G/3G/4G to the three main network operators: Orange, SFR and Bouygues Telecom. Euro Protection Surveillance (EPS) The Crédit Mutuel-CM11 Group's remote surveillance subsidiary continued to grow in 2016 and now has 415,000 subscribers (+6.5%), including 400,000 with active remote surveillance contracts (+6.7%) and nearly 12,200 with remote assistance contracts (+4.2%). EPS has consolidated its position as France's leading provider of residential remote surveillance with a market share of approximately 31% 1. Revenue in 2016 rose by 5.4% to 150 million and net income by 13.3% to 23.6 million. Fivory electronic wallet The number of partners behind the e-wallet app developed by the group increased in 2016 to offer a solution consistent with new buying practices, by making both payment and certain aspects of the shopping experience electronic regardless of the distribution channel used. In June 2016, Auchan, Oney and MasterCard acquired a stake and, in October 2016, an agreement was reached with BNP Paribas to partner on the development of an innovative solution that will capitalize on each other's knowledge and partnerships (subject to prior authorization by the European Commission regarding merger control). CM-CIC Immobilier To meet the needs of its customers and members, the Crédit Mutuel-CM11 Group organized all its real estate subsidiaries within a division that covers a range of activities. With regard to sales of new properties, CM-CIC Agence Immobilière had 8,804 net housing unit reservations in 2016, up 34% compared with 2015 (+2,220); CM-CIC Gestion Immobilière leased a total of 4,540 properties (+14%); and CM-CIC Aménagement Foncier had 1,110 building lot reservations (+17%). In terms of development, Ataraxia Promotion had 403 housing unit reservations in 2016 compared with 439 in Source: Atlas de la Sécurité 2016 / internal data Crédit Mutuel-CM11 Group Results for the year ended December 31, Strong results (in millions) adjusted change * Net banking income 13,302 12, % Operating expenses (8,202) (7,907) +1.3% Gross operating income 5,100 4, % Cost of risk (826) (803) -11.5% Operating income 4,273 4, % Gains/losses on other assets (310) (64) ns Income before tax 3,963 4, % Corporate income tax (1,383) (1,539) -11.1% Net gains/losses on discontinued operations 44 (23) ns Net income 2,624 2, % Net income attributable to minority interests % Net income attributable to the Group 2,410 2, % * at constant scope 1 Net banking income Despite persistently low interest rates, the Crédit Mutuel-CM11 Group's net banking income was billion at constant scope (+1.8%). It includes the capital gain on the sale of the Visa Europe shares, recorded in the holding company segment for 269 million. In retail banking and insurance, rate conditions and renegotiations of real estate loans negatively impacted customer margins and investment returns even though fee and commission income increased at the same time by 3.5% for retail banking. The acquisitions successfully completed in 2016 in factoring and lease financing also helped to increase the retail banking sector's business and revenue. This sector's net banking income rose by 1.2% before adjusting for the scope or change in consolidation method effects 1. Net banking income for the corporate banking and capital markets and private equity activities increased (+2.8% and +13.6%, respectively), while that of private banking was up 0.5%. Lastly, capital gains resulting from the investment portfolio positively impacted net banking income in General operating expenses The group's operating expenses totaled billion, up 1.3% over one year at constant scope 1. This slight rise includes a more than 40 million increase in the Single Resolution Fund (SRF) tax paid by the group, which rose from 43.8 million in 2015 to 84.6 million in Thanks to this tight control of operating costs, the cost/income ratio remained stable at 61.7% versus 61.6% in Gross operating income increased by 2.7% 2 to billion. 1 For details regarding the change at constant scope, please see the methodology note on page 26 of this press release 1 At constant scope 2 At constant scope Crédit Mutuel-CM11 Group Results for the year ended December 31, Net provision allocations/reversals for loan losses Overall net provision allocations/reversals for loan losses totaled 826 million in 2016 compared with 803 million in This 23 million increase includes the addition of Targobank Spain to the scope on a fully consolidated basis, which represents a cost of risk of 100 million. After adjusting for this impact and other changes in scope (including the factoring and lease financing subsidiaries acquired in 2016 from GE Capital), the Crédit Mutuel-CM11 Group's net additions to/reversals from provisions for loan losses decreased by 11.5%, thereby confirming the high quality of the group's assets. The net provision allocation on an individual basis (excluding collective provisions) was million in 2016 and there was a 46.4 million net reversal of collective provisions. Overall net provision allocations/reversals for customer loan losses represented 0.24% of loan outstandings, compared with 0.26% in At end-2016, the overall non-performing loan coverage ratio was 63.0% compared with 64.6% a year earlier. Tight control of operating costs and the cost of risk combined with a 1.8% rise in revenue led to a 5.4% increase 1 in operating income, which totaled billion at the end of Income before tax The group's income before tax ( billion) was down at constant scope (-4.2%). It was impacted by: o the group's share in the losses of Banco Popular Español (BPE); o provisioning of the BPE shares at fair value in line with analysts' consensus; and o an additional provision which increased the provision for goodwill of Targobank Spain to 100%. Net income Corporate income tax totaled billion in 2016 compared with billion in After a 23 million net loss on divested activities in 2015, the group posted a 44 million net profit in 2016, including +66 million of recycling of the translation adjustment reserve (final sale of Banque Pasche after disposal of its subsidiaries in previous years). The Crédit Mutuel-CM11 Group's net income increased, at constant scope, by 2.7% to billion. Crédit Mutuel-CM11 Group Results for the year ended December 31, A stronger financial position Liquidity and refinancing In 2016, the Crédit Mutuel-CM11 Group was able to refinance itself under good market conditions. Low interest rates and the regular presence of investors and their strong interest in our issues created a favorable environment. External resources totaled billion at end-december 2016, a 7.2% increase compared with the end of 2015 ( billion). At the end of December 2016, this comfortable liquidity situation resulted in: - a 68 billion LCR liquidity cushion held by the Central Treasury department; - a Crédit Mutuel-CM11 Group LCR ratio of 140%; and - 159% coverage of market deposits falling due in the next 12 months by holding liquid and ECB-eligible assets. Medium- and long-term refinancing The outstanding amount of resources raised with maturities of more than 12 months was 84 billion, nearly the same (+1.1%) as the previous year ( 83.1 billion). In total, 12.4 billion in medium- and long-term external resources were issued in 2016, including 9.5 billion (76.3%) in the form of public issues, with the remainder through private transactions. This 9.5 billion breaks down as follows: 3.75 billion issued by BFCM in the form of senior EMTN; 2.55 billion (equivalent) raised through U.S. Rule 144A (USD 1.75 billion) and Samurai (JPY billion) offerings; 1.7 billion issued as Tier 2 subordinated debt; 1.5 billion at 6.5 years issued in the form of housing bonds by our specialized Crédit Mutuel- CIC Home Loan SFH subsidiary. In addition, in 2016 the European Investment Bank (EIB) modified the framework of its lending packages for SMEs by extending them to intermediate-sized enterprises. The group therefore finalized a new 500 million contract under the new name loan for small, medium and intermediate-sized enterprises based on a wider potential audience and long-term interest in this type of loan. Short-term refinancing The increase in short-term resources, which benefited from large amounts of liquidity in the money market, largely explains the rise in external resources. Short-term resources totaled 48.8 billion compared with 40.8 billion at end-2015, a more than 19% increase. Surplus of stable resources The Crédit Mutuel-CM11 Group had a surplus of stable resources over stable uses of funds of 37.5 billion. This situation results from a policy that has focused for several years on strengthening deposits and extending the maturity of market debt. Crédit Mutuel-CM11 Group Results for the year ended December 31, Strengthening of the structure of the group s stable resources and uses of funds billions 2015 assets: liabilities: 400 MLT surplus funding 34.9 medium & long term funding: 83.1 MLT surplus funding 37.5 medium & long term funding: 84 customer loans: customer deposits: customer loans: 330 customer deposits: mandatory balances: 23.9 non current financial assets: 11,7 shareholder's equity: 37.1 mandatory balances: 21.2 non current financial assets: 11,1 shareholder's equity: 39.6 assets liabilities assets liabilities Capital adequacy At December 31, 2016, the Crédit Mutuel-CM11 Group's shareholders' equity totaled 39.6 billion compared with 37.1 billion at end-2015 as a result of the appropriation of net income. The Common Equity Tier 1 (CET1) ratio was 15.0% 1 at end-2016 and the overall capital adequacy ratio 1 was 18.0%, up 10 basis points over one year. These levels are significantly higher than the European Central Bank's requirements established at the time of the 2017 Supervisory Review and Evaluation Process. In fact, the CET1 capital requirement with which the group must comply on a consolidated basis was set at 7.25% in 2017 and the requirement related to the overall ratio at 9.50%, plus the conservation buffer of 1.25%. The amount in excess of the SREP requirements is therefore 775 basis points for CET1 and 725 for the overall ratio. CET1 capital 1, which was 31.1 billion at end-2016, increased by 6.9% and weighted risks, at billion, rose by 7.6% over one year. The leverage ratio 1 was 5.7%. Rating The Crédit Mutuel-CM11 Group's ratings at the end of 2016 are shown in the following table. They compare favorably to those of other French and European companies. Standard & Poor s Moody s Fitch Ratings Long-term rating A Aa3 A+ Short-term A-1 P-1 F1 Outlook Stable Stable Stable During the year, Standard & Poor s, Moody s and Fitch confirmed the Crédit Mutuel-CM11 Group's short-term and long-term ratings 2. Standard & Poor s upgraded the outlook from negative to stable in October The main factors cited by the agencies to justify the group's stability and ratings are as follows: 1 Excluding transitional measures 2 Standard & Poor s: ratings for the Crédit Mutuel Group; Moody s and Fitch: ratings for the Crédit Mutuel-CM11 Group Crédit Mutuel-CM11 Group Results for the year ended December 31, solid capitalization, a strong ability to generate capital internally, a robust bankinsurance model in France, the low risk profile of its activities. Crédit Mutuel-CM11 Group Results for the year ended December 31, The Crédit Mutuel-CM11 Gro
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